The economy will Boom again…once the corona virus blows over ? …..Corona virus ……. part 12

I think we have another 9/11 on our hands. What does that mean?

Remember those wonderful days of the 1990s?

You didn’t really need passwords. Everything was open…and growing. Then that stupid 9/11 happened. Aside from the obvious, it has continued to inconvenience us to this day. Gone are the big investments in better technologies (and Windows XP still remains the summit of our tech prowess).

Gone is good Skype, and 'lectures should be public.' Suddenly, everything is all locks. All paranoia. All the time.

Ignoring airports, we saw huge spending on economically unproductive activities.

Security everywhere. Every bag checked. 'Ideally' (for law enforcement, but not for us) every email checked. Lanyards for all…tap-security cards for doors that never needed locks before (and still dont).

Local police armed up…and instituted fine-raising activities aimed at paying for the new 'services.'

A whole generation will never know what its like to pick the library lock with a paper clip, drink cidar and play nude hide-and-seek after closing, in the dark.

 Or rock up to the airport 20 minutes before departure, check in baggage, and still have time to steal a final kiss from one's loved-one before being 'that guy' who everyone had to wait for for (come on, it was only a couple of minutes!).

9/11 portended the end of a beautiful expansion.

No more globalization.

No more as just picking up and living/working in tropical places that needed your rare skills…and were willing to pay dearly for them. No more thinking that, if worse came to worse, you could still live out your life in exile from the land seeking you for the crime you didn’t do or accidently did.

No more banking with your 12345 password. The Kondratiev wave had crest(ed)…. (There a name for the 50 year and 25 year version of these waves, which I now forget).

A post Covid world means more of the same. More baggage checks we don’t want or need. More "security spectacles" - where law enforcement will now don scrumbs and hand sanitizer everywhere. You know that hand-sanitizers-placed-everywhere is here to stay. Just like the locks from 9/11.

The boom is…yet to appear, and very, very over.

Yet to appear - because we will see a dead cat bounce.

Medical companies will flog their wares. Checks and diagnostics. Just like the public and private security guards, companies, and agencies flourished after 9/11. The lawsuits against China have already started (how many remember the calls for the Saudis to pay for the bin Laden crimes?).

History repeats itself…one self-similar, fractal turn at a time. Growth is always easier from a lower base. My shares lost 50% of their value. But when they recover, it will be an 100% gain.

Very, very over - because we have a world of Windows 98 and 9/10 to look forward to. Crappy pop-ups we cant control on iPads we cant control…because 'its easier.' I click 'inspect element' on my laptop…to remove the ads, and my students look at me like I have just cast some secret spell. We continue our descent into learned helplessness.

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Thank you ….Do you think the face masks will all just go away?

We have a world of corona bonds and 'never since World War II' to look forward to. A world of banned concerts and uncrowded classrooms. A world of…transactions costs.

Economists loathe transactions costs. We deplore them with every fibre of our being…because a 'distortion' of $5 causes $500 in economic damage (or in our language, the costs imposed by a Harberger Triangle are squared when drawn on the 2-dimensional page, but grow n-fold in the n-dimensions of our real economies).

Network economics also mean each extra person added squares the value of the whole network. Add a health check before entering each office…and you've crippled that exponential power to grow.

The economy will boom. But there will be little sparkle.

Little bang in the boom. We will add a class of health inspectors and controllers to supplememt

the law enforcement and security analysts.

We will have a world of pandemic insurance which makes everything more expensive. And planning…for the terrorist or viral vector that we (hopefully) shant see again.

A world of "are you sure you want to download/touch that?" A world without wonder.

The boom will be more concentration and far less fun.

A world where its easier to have strip mall fast food chains, than the cooking of 1,000 grandmothers who made far yummier fare in their own home-y establishments.

Want to add word or two?

Its FAR easier to ensure compliance with the raft of new health regulations by 20 mega-chains, than 500,000 independent family restaurants. And to lock-down 5 local hospital conglomerates per city…than 500 family doctors per city, who know your name, and remember the day you were born.

It will be a boom in asset prices (to be VERY sure). Equity prices have already fleetingly sought higher ground…and will do so everytime old men utter the words…quantitative easing.

These lead to rising housing prices, and more people living like "rabbits in their cages" (to quote a French minister). Boom!

You're out on the street. Boom!

Your savings are gone. Boom! Your insurance premiums have gone up…again. Boom!

Your comment ….? 

The economy WILL boom. But it won’t be a boon, for millions in the middle and lower classes.

For us, we can look forward to more mixed-use developments which keep us living in concentrations… where security guards can monitor us via 24 security cameras…ensuring compliance with the health code of the month.

 For us, the economy will go on with a whimper more than a boom.